Union Finance Minister Nirmala Sitharaman has proposed sending the newly introduced Securities Market Code Bill, 2025, to a parliamentary standing committee for detailed scrutiny. This move came after strong objections were raised by the Opposition in the Lok Sabha, led by the Congress party, which argued that the legislation grants excessive and unconstitutional powers to a single regulatory body.
Opposition Raises Red Flag Over Constitutional Violations
Congress MP Manish Tewari strongly opposed the Bill during its introduction on Thursday. He contended that the proposed law results in an unconstitutional concentration of legislative, executive, investigative, adjudicatory, and quasi-judicial powers within a single authority—the Board (SEBI). Tewari asserted that this fusion of powers blatantly violates the fundamental principle of the separation of powers, a cornerstone of the Indian Constitution.
He warned that such a structure creates a genuine apprehension of institutional bias, potentially offending Articles 14 (right to equality) and 21 (right to life and personal liberty) of the Constitution. Tewari further criticized the Bill for what he described as an excessive delegation of essential legislative functions to the executive. He argued that core policy matters, including regulatory scope, registration standards, penalties, and the definition of 'securities,' are left to be determined by executive-made rules, effectively reducing Parliament to a mere enabling authority.
Concerns Over Coercive Powers and Safeguards
The Congress leader also highlighted specific provisions in the Bill that he found problematic. He pointed out that several clauses permit actions like search, seizure, attachment of property, and freezing of bank accounts. According to Tewari, these coercive powers lack adequate statutory safeguards, narrow thresholds, and strict timelines. The ability to issue prolonged interim orders, including ex-parte actions, exercised through delegated legislation and executive discretion, was said to fall foul of due process requirements and the test of proportionality.
Additionally, Tewari raised concerns over the inclusion of sweeping 'notwithstanding clauses', immunity for actions taken in good faith, and wide powers granted to the central government to issue directions or supersede the Board. He argued that these provisions together undermine the rule of law and the principle of equality before the law as enshrined in Article 14.
Bill's Objective and Government's Response
The Securities Market Code Bill, 2025, seeks to consolidate and modernize India's securities market regulations. It aims to merge the provisions of three key existing laws: the Securities and Exchange Board of India Act, 1992, the Depositories Act, 1996, and the Securities Contracts (Regulation) Act, 1956. The government's stated objective is to create a unified legal framework to strengthen investor protection and significantly improve the ease of doing business within India's financial markets.
In response to the pointed criticisms, Finance Minister Nirmala Sitharaman stated that since the government was already proposing to refer the Bill to a department-related standing committee, all such detailed concerns could be thoroughly discussed and examined there. The presiding officer, Krishna Prasad Tenneti, noted that the final decision on the referral would be taken by the Speaker of the Lok Sabha.
The proposed committee review will now provide a platform for a deeper examination of the complex legal and constitutional questions raised, balancing the need for regulatory efficiency with robust checks and balances.
